Working Paper No. 1255

Does Job Security Hamper Employment Prospects?

Published: December 6, 2018Pages: 35Keywords: Employment protection; Active labor market programs; Unemployment JEL-codes: J60; J64; K31; H80

Does Job Security Hamper Employment Prospects? Carl Magnus Bjuggren and Per Skedinger


We investigate the effect of employment protection legislation (EPL) on the propensity to hire workers from unemployment and active labor market programs (ALMPs), utilizing a reform that decreased dismissal costs for small firms only. Using administrative data from Sweden, we find that less stringent EPL increased the share of workers hired from unemployment and some ALMPs. Our results suggest that there was less screening of new hires after the reform, and that liberalization of EPL mitigates the stigma associated with unemployment and participation in ALMPs.

 

Interdisciplinary European Studies

The European Union in a Changing World Order

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This book explores how the European Union responds to the ongoing challenges to the liberal international order. These challenges arise both within the EU itself and beyond its borders, and put into question the values of free trade and liberal democracy. 

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